Use the Following to Answer Questions :
Exhibit: Shifting IS $I S _ { 1 } ^ { * }$

question 107

Multiple Choice

Use the following to answer questions :
Exhibit: Shifting IS* and LM*
-(Exhibit: Shifting IS* and LM*) A small open economy with a floating exchange rate is initially in equilibrium at A with $I S _ { 1 } ^ { * }$ $L M _ { 1 } ^ { * } .$ Holding all else constant, if the government imposes a tariff on imports in order to protect domestic jobs, then the _____ curve will shift to _____.

• A) LM₁*; \(L M _ { 2 } ^ { * }\)
• B) LM₁*; \(L M _ { 3 } ^ { * }\)
• C) IS₁*; \(I S _ { 2 } ^ { * * }\)
• D) IS₁*; \(I S _ { 3 } ^ { * }\)

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